Peers will receive up to £30,000 tax-free on top of allowances worth £20,000
under reforms to be introduced following a series of expenses scandals.

For the first time, members of the Lords are to receive a daily fee of £200, described as a “contribution to income,” for clocking in at the upper chamber, even if they stay for only a couple of hours.

The reforms involve an effective £3,000-a-year pay rise for some peers, as under the current system peers can claim up to £26,000 in subsistence and office allowances, the equivalent of £180 a day.

The £200-a-day fee is in addition to £140-a-day in overnight costs for lords who do not live in London.

Drawn up by the Senior Salaries Review Board, the new system is designed to toughen up the rules following scandals in which peers claimed lucrative overnight expenses despite allegedly living full time in the capital.

Others “clocked in” for just a few minutes in order to register for the allowance then went home.

Related Articles

Lords will vote on the plans next month, and the SSRB said that they hoped the package would be adopted in full and introduced at the start of the new financial year in April.

In a change to the honour system currently in place, peers will be required to provide receipts to support their claims and prove that their second home is not in fact their main residence.

But concerns were raised that lords were effectively being rewarded for abusing the system, with an overall “pay rise” and the introduction of fees rather than the reimbursement of expenses which is the only public funds peers have traditionally received until now.

The Labour MP John Mann said: "It is right that the rules should be made tighter so lazy lords can't exploit the system, but to give them a pay rise as reward for general abuse of expenses is madness.”

Norman Baker, the Liberal Democrat MP who has campaigned for more openness for Parliamentary expenses, added: "This falls well short of what is required. It is a game of Monopoly – pass Go and collect £200."

Bill Cockburn, chairman of the SSRB, said that the system had been open to abuse in the past but insisted that the new regime would prove tougher than the current one.

He said: “We are sending a strong signal: if you’re swinging the lead, don’t do it.”

Predicting that the reforms would be broadly “cost neutral” he insisted that the 400 peers who turned up to the House each day deserved to be paid, adding: “That is a payment for the work that they are doing, explicitly so.”

In future, under the new system, lords would have to sign a declaration if they wanted to register a main home outside of the capital in order to claim second home expenses in London.

They would need to answer a series of questions to qualify for the allowance, such as whether their children lived in the property, how many nights they spent there and where the majority of their possessions were kept.

Any peer whose main property was within “reasonable commuting distance” of Westminster would be barred from claiming.

Baroness Uddin, a Labour peer, is currently waiting to hear whether she will face criminal charges after designating a flat in Kent which she allegedly left barely occupied as her main home.

The Daily Telegraph can today also disclose that Baroness Morgan, formerly a senior aide to Tony Blair, claimed £40,000 in expenses on a £1.1 million London house where her husband and child lived by telling Parliament that the family’s house in Hampshire was her main home.

Under the new regime, peers who were still able to claim overnight expenses would see the rate cut from £174 a night to £140.

They would have to provide receipts and could only claim for basic costs such as hotels, rent and utilities. Mortgage interest repayments are to be phased out over five years, in line with new rules in the Commons.

Mr Cockburn said that as a “point of honour” peers should always pay capital gains tax when selling a home on which they had claimed second home expenses.

The £200-a-day clocking in fee for “out-of-pocket expenses, meals, office costs, including secretarial assistance if required, and a contribution to income,” replaces a package of current allowances.

Crucially, however, the old system was designed to compensate for expenses actually incurred, rather than provide payments for work done, and the SSRB admitted that few peers would use it for office costs as they already enjoyed separate allowances from which they could fund computers, broadband connections and stationery.

Peers will continue to be allowed to charge the taxpayer to travel first class to the House of Lords, but must now provide receipts for all journeys; family members will be allowed six trips a year in standard class.

The SSRB called for the scrapping of the “antiquated” system whereby peers catch the eye of a clerk in the chamber to have their name ticked off before they can receive their allowances, saying that technology should be should be used to clock lords in and out.

And they urged the Government to pass a new law making lords allowances liable for tax, which they are exempt from at present, after which their expenses would increase to compensate for the loss in income.

In future, the National Audit Office will check up on peers’ claims, with a new Commissioner for Standards monitoring any abuses of the system.

Gordon Brown, Lord Strathclyde, Conservative leader in the lords, and Lord McNally, his Liberal Democrat counterpart, all welcomed the reforms and urged peers to adopt them.